Post by Sapphire Capital on Nov 17, 2012 2:47:10 GMT 4
Eurodollar Banking and Currency Internationalisation
Dong He
Hong Kong Monetary Authority
Robert N. McCauley
Bank for International Settlements (BIS)
June 4, 2012
BIS Quarterly Review, June 2012
Abstract:
It is widely held that currencies of surplus countries, such as China, cannot enjoy wide international use. We argue that the eurodollar market has had little to do with the direction of net capital flows or the US current account balance. It has played different roles over the past 38 years, most of all intermediation among non-US residents. Looking at the eurodollar market could help predict the evolution of the offshore renminbi market. Even if it now mainly serves as a conduit of funds to mainland China from abroad, in the future this market, too, could mainly intermediate between non-Chinese residents.
papers.ssrn.com/sol3/papers.cfm?abstract_id=2128556